After 3 consecutive rate rises, the Reserve Bank has given home loan borrowers a break by pausing on their cycle of rate rises for the first time in four months. However, this is not likely to last as inflation forces the central bank's hand.
In a statement to the markets, the RBA said that despite weakness in Europe, the global economy is still heading for “trend growth” this year. It also stated that while many commodity prices had fallen in recent weeks, those most important to Australia – namely iron ore and coal – had maintained their strength.
Inflation is expected to remain in the upper end of the RBA’s 2-3% target over the next 12 months and the central bank will be sure to keep a watchful eye on any data that may show that it is creeping above the preferred range.
Many analysts expect another two rate rises by the end of the year and even more in 2011.
In a statement to the markets, the RBA said that despite weakness in Europe, the global economy is still heading for “trend growth” this year. It also stated that while many commodity prices had fallen in recent weeks, those most important to Australia – namely iron ore and coal – had maintained their strength.
Inflation is expected to remain in the upper end of the RBA’s 2-3% target over the next 12 months and the central bank will be sure to keep a watchful eye on any data that may show that it is creeping above the preferred range.
Many analysts expect another two rate rises by the end of the year and even more in 2011.
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